The Federal Budget Crunch

7:06 pm

Thu April 14, 2011

Congress Sends Budget Compromise To Obama

Congress has sent President Obama bipartisan legislation making $38 billion in spending cuts to see the government through the rest of the fiscal year.

The Senate voted 81-19 to approve the measure Thursday, not long after the House gave its approval, 260-167.

The bill was the product of negotiations involving the White House, House Republicans and Senate Democrats, who reached agreement last week in barely enough time to avert a threatened government shutdown.

The legislation drew support from lawmakers in both parties, but little if any enthusiasm.

Its passage closes the books on the current budget year. It also clears the way for a broader debate about spending priorities in an era of soaring budget deficits. That struggle begins in earnest Friday, when House Republicans are expected to approve a budget that calls for major changes in Medicare and Medicaid, as well as deep cuts elsewhere.

2012 And Beyond

Many Tea Party-backed Republicans had sought even deeper cuts to the short-term measure, causing Democrats to dig in their heels in a stalemate that threatened to shut down the government. The two sides finally agreed to a compromise just hours before a midnight deadline last Friday.

"This bill is not perfect. It's no cause for celebration. It's just one step and the next step will occur tomorrow," House Speaker John Boehner (R-OH) said. He was referring to a scheduled House vote on Republican Rep. Paul Ryan's proposed 2012 budget, which cuts trillions from federal deficits over the next decade.

At the same time, the bill marks the largest package of non-defense reductions in history, and Boehner said it means "Washington will spend $78.5 billion less than what President Obama wanted to spend this year."

After voting on the short-term measure Thursday, the House launched debate on Ryan's 2012-and-beyond plan, which promises to cut the long-term budget blueprint Obama laid out in February by more than $6 trillion.

On Wednesday, Obama countered the long-term plan with a new call to increase taxes on wealthier people and impose quicker cuts to Medicare, launching a roiling debate in Congress and the 2012 presidential campaign to come.

Obama fired a broadside at the plan, which calls for transforming the Medicare health program for the aged into a voucher-like system, beginning with people under the age of 55. Ryan, the House Budget Committee chairman, also proposed stringent cuts on Medicaid, which provides health care to the poor and disabled, including people in nursing homes.

Budget Compromise

More immediate, however, is the 2011 spending measure Congress passed to fund the day-to-day budgets of federal agencies through September. It combines more than $38 billion in cuts to domestic accounts with changes to benefit programs, like children's health care, that Congress' own economists say are illusory.

The measure was a compromise between Obama, Boehner and Senate Majority Leader Harry Reid (D-NV) that considerably smooths a much more stringent version that passed the House in February.

The bill cuts $600 million from community health programs, $414 million from grants for state and local police departments, and $1.6 billion from the Environmental Protection Agency's budget. Community development block grants, a favorite with mayors of both political parties, take a $950 million cut. Construction and repair projects for federal buildings absorb an almost $1 billion cut.

Obama, however, was able to ease cuts to favored programs like medical research, family planning programs and education, while largely ridding the bill of conservative policy initiatives to block last year's health care law and new environmental regulations.

Obama did sign a bill Thursday to repeal one provision of the health care law that was widely unpopular with businesses. The requirement would have forced millions of businesses to file tax forms for every vendor selling them $600 in goods each year, starting in 2012.

Republicans hope it is the first of many such bills, resulting in the entire health care law being scrapped. Democrats say the bill is part of an inevitable tinkering that will be needed to improve the health measure.

Health Law, Planned Parenthood Amendments

Before passing the spending bill for the remainder of the fiscal year, Congress officially excised provisions that would have eliminated funding for the new health care law and for the organization Planned Parenthood. The compromise on the bill reached last week called for a separate vote by the Senate on both amendments.

Although the House twice passed the proposals, neither came anywhere near passage in the Senate on Thursday. The vote to defund the health law was 47 to 53, almost exactly the same as a Senate vote in February to repeal the measure. All of the yes votes came from Republicans, all the no votes from Democrats.

A ban on federal funding for Planned Parenthood was a priority of lawmakers who object to the organization as the country's largest abortion provider, although federal law already bans the use of federal funds to perform most abortions. Thursday's vote in the Senate was more mixed by party, but it got even less support. Only 42 senators voted to strip federal family planning funds from the organization.

Deficit Reduction

The budget Congress approved would have little direct impact on the deficit through the Sept. 30 end of the fiscal year, according to the Congressional Budget Office, since about $8 billion in immediate domestic program cuts are more than outweighed by increases for the Pentagon and ongoing war costs.

On Wednesday, Obama said spending cuts and higher taxes alike must be part of any deficit-reduction plan, including an end to Bush-era tax cuts for the wealthy.

"We have to live within our means, reduce our deficit and get back on a path that will allow us to pay down our debt," the president said in a speech at George Washington University, a few blocks from the White House. "And we have to do it in a way that protects the recovery, and protects the investments we need to grow, create jobs and win the future."

Obama's plan relied on some of the same deficit-reduction measures proposed in December by a bipartisan fiscal commission he appointed. The president met Thursday at the White House with the co-chairmen of the commission, Democrat Erskine Bowles and Republican Alan Simpson.

NPR's John Ydstie, Mara Liasson and Julie Rovner contributed to this report, which contains material from The Associated Press. Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.